Global interest rates drop to lowest in history

China inflation slows as lockdowns ease

A significant fall in consumer demand due to the lockdown has meant that the rate of inflation in China has dropped from an eight-year high.

AFP reports: "Inflation in China grew at its slowest pace since last October, official data showed Friday, falling from eight-year highs due to a drop in food prices as the country gradually lifts virus lockdowns.

Consumer prices jumped 4.3 percent in March year-on-year, the National Bureau of Statistics (NBS) said, after increasing 5.2 percent in February.

This is lower than the forecast of a 4.9 percent increase by analysts polled by Bloomberg.

Weak oil prices and suppressed demand due to drastic coronavirus measures meant that consumer inflation last month grew at the slowest pace since October, according to NBS data."

G-20 leaders are set to meet once again, after their earlier meeting towards the end of March, to discuss their response to the Covid-19 crisis.

PTI reports: "Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das will on April 15 participate in the meeting of the G-20 countries to discuss the way forward in supporting the economy after the COVID-19 pandemic.

The virtual meeting of the finance ministers and central bank governors comes within a fortnight of their last meeting on March 31.

The April 15 meeting follows the Extraordinary Energy Ministers meeting of the G-20 countries on Friday.

“The April 15 meeting is in continuation of the March 31 meet and working groups would give their suggestions,” an official said.

The G-20 ministers are meeting at a time when rating agencies and economists are saying that the lockdown due to COVID-19 may lead the world economy into recession.

Several rating agencies have projected lower growth for the world economy with India projected to clock a 30-year low level of growth at 2 per cent in 2020-21."

Some of the world's wealthiest people say coronavirus lockdowns aren't worth the cost — not Philippine billionaire Enrique Razon.

COVID-19 pandemic ‘severe demand shock’ for Indian economy: D&B

Here's one more estimate of the likely impact of the coronavirus pandemic on India's economy.

This one though is far less gloomy than a few other forecasts that have come out over the last few days.

PTI reports: "The coronavirus pandemic is a “severe demand shock” for the Indian economy and could lead to further moderation in the country’s GDP growth as the coronavirus-induced lockdown is causing significant disruption across multiple sectors, says a report.

According to Dun & Bradstreet, besides the impact on human lives and global supply chain, the pandemic is a severe demand shock which has offset the green shoots of recovery of the Indian economy that were visible towards the end of 2019 and early 2020.

“A fall in the optimism levels amid heightened uncertainty has led to a ‘double whammy’ — closure of businesses leading to global supply chain disruptions and a steep fall in the consumption,” said Arun Singh, chief economist at Dun and Bradstreet India.

Accordingly, Dun & Bradstreet has revised its Gross Domestic Product (GDP) estimates for India downwards by 0.2 percentage points for fiscal year 2020 to 4.8 per cent and by 0.5 per cent for fiscal year 2021 to 6 per cent."

2:00 PM

China's total social financing soars to record 5.15 trillion yuan in March

While there is a lot of noise about economic stimulus measures implemented by the US, Europe, and Japan, China has been quietly ramping up its own spending budget.

Reuters reports: "China's total social financing (TSF) rose to a record 5.15 trillion yuan ($732 billion) in March, compared with 855 billion yuan in February, the central bank told a briefing on Friday.

Analysts polled by Reuters had expected 2.8 trillion yuan.

TSF includes off-balance-sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

Outstanding TSF was 262.24 trillion yuan ($37.3 trillion) at the end of March, up 11.5% from a year earlier."

COVID-19 | Synthetic textile industry seeks special relief package

The Synthetic and Rayon Textile Export Promotion Council (SRTEPC) representing the man-made fibre textile segment has approached the government for a relief package to ensure business continuity post COVID-19 phase.

“Man-made fibre textile segment is one of the worst hit in this pandemic. The industry has incurred huge losses and fund shortage due to the cancellation and deferred orders, which has put the industry on ventilators,” said Ronak Rughani, chairman, SRTEPC.

SRTEPC has submitted a memorandum to the government seeking aid and relief.

It has asked the government to announce a special corona relief package for the textile industry including entire value chain of the manmade fibre textile segment to tide over the prevailing coronavirus crisis.

It is not just retail borrowers who lack clarity regarding the applicability of RBI's 3-month loan moratorium.

NBFCs, which have extended a loan moratorium to their customers, are wondering if they themselves are eligible for any such moratorium on bank loans.

PTI reports: "Non-banking finance companies (NBFCs) are likely to face liquidity challenges due to lack of clarity on the applicability of the Reserve Bank’s moratorium on their bank loans and poor collection due to the nationwide lockdown, says a report.

According to a report by rating agency Crisil, Non-banking finance companies face a double whammy because they are offering moratorium to customers despite not getting one themselves from their lender-banks.

NBFCs have sought clarity from RBI on applicability of moratorium and also on access to a formal liquidity window which may provide some structural liquidity support to them similar to that available for banks.

It said almost three-fourths of NBFCs will have a liquidity cover of over three times to meet capital market debt obligations up to May 31, 2020, when the moratorium is slated to end, while only 3 per cent have less than one time liquidity cover.

A liquidity cover of less than one time indicates inability to make debt repayments on time and in full without the benefit of collections, external support, or access to additional credit lines or funding.

If there is no moratorium on bank debt, only 37 per cent of the Crisil-rated NBFCs will have a liquidity cover of more than three times for their total debt repayments up to May 31, 2020, while those with less than one time would increase to 11 per cent, the report said."

Once the coronavirus lockdown is over in India and commercial passenger flights are permitted again, IndiGo will deep clean its aircraft more frequently, stop in-flight meal service for a brief period and will fill the maximum 50% seats in airport buses, airline’s CEO Ronojoy Dutta said on Friday.

“In situations like these, companies do not have growth or profitability but only liquidity. That means our singular focus is on cash flow. We are examining all our fixed costs and looking for ways to minimise them,” he said.

Dutta said IndiGo’s plan post lockdown will be going forward to first start the services and gradually ramp up the capacity.

In a call, Asakawa commended the Indian government’s decisive response to the pandemic, including a national health emergency program, tax and other relief measures provided to businesses and a USD 23 billion (Rs 1.7 lakh crore) economic relief package announced on March 26 to provide immediate income and consumption support to the poor, women, and workers affected by the three-week nationwide lockdown.

“ADB is committed to supporting India’s emergency needs. We are now preparing USD 2.2 billion in immediate assistance to the health sector and to help alleviate the economic impact of the pandemic on the poor; informal workers; micro, small, and medium-sized enterprises; and the financial sector,” Asakawa said.

ADB is also engaged with the private sector to meet its financing needs during this period, ADB said in a statement."

11:00 AM

Junk bond prices rally after Fed offers lifeline to riskier credits

For the first time ever, the US Federal Reserve will be buying junk bonds in order to inject fresh money into the economy. This has led investors to rush to buy junk bonds, leading to higher prices.

Reuters reports: "Prices on U.S. high-yield bond exchange-traded funds and individual junk-rated issues like Ford Motor Co and Macy's Inc soared on Thursday after the Federal Reserve announced it would expand its corporate bond-buying program to include some speculative-grade debt.

On Thursday, Fed Chair Jerome Powell said the central bank would continue to use all the tools at its disposal until the U.S. economy begins to fully rebound. Analysts were especially encouraged by news the Fed would support a broad range of junk debt by purchasing shares of exchange-traded funds (ETFs).

“The announcement today gave the credit markets an adrenaline shot. It can't stop companies from defaulting, but at least this helps high-yield companies manage borrowing costs while they fight to stay in business,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.

The Fed's $2.3 trillion package includes a primary market facility that specifies that companies recently downgraded from investment grade to the first tier of junk - so-called fallen angels - will be eligible for the program.

That includes Ford, whose bond prices rallied and stock jumped 11.3%. Macy's, another recent fallen angel, also saw bond and share prices rally, with the stock up 11.5%."

Saudi, Russia outline record oil cut under U.S. pressure as demand crashes

Here are the details of the understanding between OPEC and its allies that failed to impress oil traders.

Reuters reports: "OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

But the group, known as OPEC+, said a final agreement was dependent on Mexico signing up to the pact after it balked at the production cuts it was asked to make. Discussions among top global energy ministers will resume on Friday.

The planned output curbs by OPEC+ amount to 10 million barrels per day (bpd) or 10% of global supplies, with another 5 million bpd expected to come from other nations to help deal with the deepest oil crisis in decades.

Global fuel demand has plunged by around 30 million bpd, or 30% of global supplies, as steps to fight the virus have grounded planes, cut vehicle usage and curbed economic activity.

An unprecedented 15 million bpd cut still won't remove enough crude to stop the world's storage facilities quickly filling up. And far from signalling any readiness to offer support, U.S. President Donald Trump has threatened Saudi Arabia if it did not fix the oil market's problem of oversupply.

Trump, who has said U.S. output was already falling due to low prices, warned Riyadh it could face sanctions and tariffs on its oil if it did not cut enough to help the U.S. oil industry, whose higher costs have left it struggling with low prices."

Us oil rig count down by 175 (32%) last 2 months. Which was down by 150 (21%) the previous year. Low oil prices are hurting shale bad.

We must buy as much oil as possible at this low prices rather than invest them in low yielding treasury.

Truckers seek govt intervention to help stranded drivers, for safety of goods

People handling the transport of essential goods continue to be harassed by government authorities, threatening the availability of essential goods to consumers.

PTI reports: "In the wake of Covid-19 lockdown, truckers under the aegis of AIMTC on Thursday reiterated their demand for help to stranded drivers and protection of goods they were carrying.

Seeking support from the government, transporters said supplies could be hit if problems are not addressed as still a large number of drivers were stranded while many have abandoned trucks loaded with goods at various places.

“A large number of truckers are still stranded at various places without adequate food and support while at many places they have abandoned trucks with goods in absence of proper support,” AIMTC Secretary General Naveen Gupta said.

“High-handedness by the personnel manning the checkposts/nakas and in some cases leading to harassment, extortion and beating of drivers, creating panic among them, is the big roadblock,” AIMTC President Kultaran Singh Atwal said.

He said at places goods worth thousands of rupees have been left abandoned in trucks by truckers.

Even if the vehicle is made to move across a check-post or naka by talking to senior officials, it get stuck at some other place, he said."

Beaten-down valuations attract investors in March

Equity mutual fund (MF) schemes saw the highest-ever monthly inflows in two years as investors looked to invest at a time when most shares are available at highly beaten-down valuations even as the month saw overall industry outflows at the highest quantum since September 2018.

In March, the net inflow into equity schemes was pegged at ₹11,722.74 crore, as per data from the Association of Mutual Funds in India (AMFI). This was the highest monthly inflow since February 2018 when such schemes registered inflows of ₹14,683 crore.

Further, there was a rise in the number of SIP (systematic investment plans) folios as well in March.

Speaking at an event, the Niti Aayog VC batted for more aid to informal sector workers who have been the worst hit amid the nation-wide lockdown.

PTI reports: "Niti Aayog Vice Chairman Rajiv Kumar on Thursday said India’s informal sector is too large and more needs to be done for workers employed in the segment, including giving them social security cover.

“We have too large informal sector (93 per cent of our workforce) in our economy where workers have no social security.

“Time has come to do much more (for informal sector workers) than signing ILO treaties,” he said at an event organised by Bennett University’s Times School of Media.

Citing the recent example of thousands of migrant workers trying to rush back home after the imposition of the coronavirus lockdown, Kumar said, “Otherwise, we won’t be able to control migrant labour... which happened recently...Social security is crucial for all of us.”

Speaking at the event, former chief economic advisor Arvind Virmani said the economic effect of the current lockdown is at 2.8 per cent of GDP. Former finance secretary Subhash Chandra Garg said sectors like mining, manufacturing, construction, infrastructure, travel and tourism are badly hit."

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